Answer to Question #184422 in Economics for Amakiri Edith

Question

Explain how function of money has solved the problem of barter

Answer 1

The earliest form of trade that existed was barter. But barter has many disadvantages that have led people to invest money.

Barter is the exchange of one thing or service for another. What is money? Money can be anything that can be accepted as payment for goods or services. Since the early centuries, precious metals such as gold and silver, along with copper, have been the most popular forms of money - money goods. That is, the exchange of goods for "money goods" or money is also barter.

In a subsistence economy, when goods were exchanged for goods, the need for money was not as acute as in a developed market. And, nevertheless, even the most primitive states have created their own kinds of money. The role of money, the standard of all exchanges, always fell to the commodity that was in abundance or for which there was the greatest demand.

Historians have found evidence that among the peoples of the world, a variety of goods played the role of money: salt, cotton fabrics, copper bracelets, gold dust, horses, shells, and even dried fish.

A curious fact eloquently testifies to how big role money has played in people's lives since ancient times. In the glacier of the Ötztal Alps, archaeologists discovered a mummy that had lain there for 5 thousand years. When they began to examine her, they found that one of her hands was clenched tightly into a fist and was holding a copper plate. This means that having fallen into a blizzard and realizing that he was on the verge of death, the Bronze Age resident was most afraid of losing the most valuable thing he had with him - money because it was such copper plates that played the role of money.